KAL and the Chinese reserve

The Economist (2007-08-11) cartoonist KAL describes beautifully the scenario of China’s power to blow away the US economy, as outlined in my 2007-03-03 post "Wargamer’s view of Shanghai market jitters". The sluice gates will be opened, 2010 is my current thinking, sooner if the US plays tough-guy.

For those without graphics: The title is "USA and China Talk Money" A buoy with "1.33 trillion reserves" floats in a dam that looks like the Great Wall of China. Uncle Sam, in the ravine in front of the dam, holding a sign "Fix the Yuan" says "I’m terribly sorry… but if things don’t change I may be forced to bring trade sanctions to bear…" On top of the wall, a Chinese dragon, one hand pulling on the gate marked "DANGER" at the front of the dam, says "Thanks ever so much for the warning! Just one question… did you bring your swimming trunks?"

2 Responses to “KAL and the Chinese reserve”

[…] "KAL and the Chinese Reserve" (2007-08-14) is worth another look, although it’s a bit dated by the Global Financial Crisis, and the "1.33 trillion" is now 2 trillion (with another trillion owed by the US to Japan, and yet another owed to sundry other countries). The 2 trillion owed to China is despite China gradually spending that reserve hand-over-first on overseas assets. Today, the dragon might be threatening to release the floodgates not to pressure on exchange rates, but on climate policy. […]

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